"But just for have a global fiat pair for DNotes should be great."
Yeh, infovortice. No argument from me over this one. It's a big big step in a crypto's development.
Mark
DCEBrief will be covering a very long wish list as we get established. We will be covering the "ideals", the hurdles, and the pitfalls. There are many obstacles confronting Bitcoin and digital currency from mass acceptance. Bad consumer or user experience is a vital consideration to avoid. May be that is the primary reason why the credit card companies are not that concerned about our industry and everyone is jumping into the Blockchain bandwagon. Don't get me wrong. Blockchain related business opportunities will be massive and DNotes will be a major player. Our primary focus at this time is to be the trusted global digital currency that will be superior to fiat currency. How do we go about doing it is a huge strategic and logistic challenge few would care to under take. It is a massive undertaking but highly essential and immensely valuable.
There are many "good ideas" being tested including the nanocard. If that is the best we can do, our argument that Bitcoin and digital currency transaction has a significant cost advantage is fundamentally fraud. When conversion cost, fees, and risk of currency lose are all factored in, it is often more expensive than using other forms of payment. That is the primary reason why actual use of Bitcoin as a form of payment has been far below what the industry had wished for. It is far from being cost effective. Strangely, we are reintroducing more middlemen in certain cases resulting in higher fees.
The ultimate and core mission of DNotes is to reach the point when most DNotes transactions are truly between two parties without a middleman irrespective of where the two parties are located. That is what happens when everyone accepts DNotes. Being the global digital currency is what it takes. That is what we are striving for. DCEBrief is our next building block. Get ready.
This is a great post, creating middlemen to facilitate transfers is only a short-term solution to individual currencies lacking the infrastructure to be standalone services. Over time, DNotes will have the infrastructure built, and I'm sure will offer many of the same services that third parties are currently offering for Bitcoin. Middlemen are indeed expensive, imagine how hard it would be for a bank to compete with a company that provides lending, investment and bank processing opportunities with near zero transaction costs!? A profit model would still exist, but one that does not penalise what the company / currencies core purpose is - value transfer. Fees merely decrease the number of transactions.
Hypothetically, Imagine if DNotesVault processed USD into DNotes (hopefully for free), then allowed all transactions to be free from there on in using DNotes, a currency people can rely on for stability and use for merchant payments? A 1% commission could be made when people take their DNotes OUT of the network and into USD (to fund further growth, and protect value). That would mean more incentive for customers to leave their money inside the network. DNotesVault could one day become a bank (which I'm sure would be extremely expensive to set up - could partner with a bank?) and allow people to engage in either p2p lending in DNotes OR pay interest on deposits, taking interest from borrowers. Given the steady (but ever decreasing) supply of new coins in the network, this could put some 'upwards pressure' on DNotes value - because lenders would need to find DNotes to pay back their loan. This would mean lenders would need to pay back the initial principal of DNotes borrowed PLUS interest (which I imagine would only be available to purchase from an exchange like DNotesVault could one day become, unless the borrower is a merchant accepting DNotes - by which time transactional use is being achieved).
I haven't thought this through in detail or anything, but crypto banking could work in some ways to protect the value of crypto, thanks to people needing to purchase more of the crypto than they borrowed to pay back to lenders. One issue with this, is that depending on the amount of lending, and upwards pressure the repayment purchases at exchanges creates, would mean that borrowers could end up paying much more (in terms of USD) than they originally intended when they took out the loan. This could be easily communicated though, and wouldn't matter much if DNotes had a massive market cap in the billions. The free-market would be pretty good at deciding what the appropriate interest rate offered etc would be, and because crypto is net-positive, there won't be any threats to the eco-system because in the crypto world, having 1 DNote deposited in your bank, means your bank can only loan out 1 DNote. In the current banking world, $1 means a bank can lend $10 or more.
At the end of the day, nobody knows what it would look like, because we only have 'logic' and 'behavioural science' to base theory on.
I need to stop before I get too far into thinking about what the future could look like. I should probably write down some thoughts before I forget about them though...
What would a crypto-currencies stability look like, if there existed an algorithm that automatically manipulated the exchange fees on both the buy and sell side of a proprietary crypto exchange?
Bear with me, this could be horrendously stupid, and I tend to think it up as I go along (really should be doing other things too, but this is more interesting):
Imagine TeeGeeCryptoExchange is the only place where TeeGeeCrypto can be bought and sold. TeeGeeCrypto has a desired 'trading range' of (+/-) 1% daily, and +/-(5%) on 30 day moving average.
Now, fees are charged when people buy TeeGeeCoin with USD, and also when people sell TeeGeeCoin for USD. For simplicities sake, let's say that TeeGeeCryptoExchange charges 1% to both buyer and seller that are trading TeeGeeCoin with one another, for a total profit of 2%.
Now, TeeGee's mathematical algorithm that he is no-way-near smart enough to program notices one day, that the desired trading range is beginning to test the bottom end of the 5% change in value over the last 30 days. As the value of the coin gets closer and closer to -5% change over the last 30 days, it changes the fees placed on both buyers and sellers accordingly to 'soften' selling pressure, and 'encourage' buying pressure.
When trading is steady, 0% change - 1% fee to buyer, 1% fee to seller.
When trading is pushing price down by 1% - 0.75% fee to buyer, 1.25% fee to seller
When trading is pushing price down by 3% - 0.25% fee to buyer, 1.75% fee to seller
When trading is pushing price down by 5% - 0% fee to buyer, 2% fee for seller
And of course the other vice versa:
When trading is pushing price up by 1% - 1.25% fee to buyer, 0.75% fee to seller... and so forth
TeeGeeCryptoExchange makes a fixed 2% profit on each crypto transaction regardless of the fee's charged. Normally with markets, as the price changes, more people are prepared to buy or sell, depending on which way the market moved and vice versa. With this method, I'm provisionally thinking that the demand and supply of TeeGeeCoin could be to some degree, manipulated using fees, rather than having demand/supply change only due to changes in price (if stability is the goal).
Now what if it was a really horrible day at the exchange, and TeeGeeCoin drops 10% because not enough sellers were put off by the increased fees charged, and not enough buyers were interested by zero fees?
Well...
When trading is pushing price down 10% - Buyer awarded 3% fee charged to seller, 5% fee for seller. (TeeGeeCryptoExchange retains 2% of fee)
As in, the seller is charged 5% for further trying to tank the price (which hopefully trading vicissitudes continue to lessen with the fee structure anyway), and 3% of that 5% is paid to the buyer, to improve buy depth. TeeGeeCryptoExchange earns a continual 2% commission from every transaction, and fees are awarded to buyer / seller when market imbalances exist.
Anyway, just a casual thought / model to base some future ideas on. I was particularly interested in shifting demand/supply from price, to fees. The consistent fee retained by TeeGeeCryptoExchange, regardless of fees charged to buyer / seller would mean interests lie in stability. The model would also allow sustainable growth over time. Perhaps an exchange out there is already doing this?
Yup, I'm done. Feel free to comment.
